Firm's Control Your U-5

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Mar 29, 2007 4:21 pm

NY firms win absolute immunity for U-5s By Dan Jamieson
March 29, 2007 The New York Court of Appeals today ruled that brokerage firms have absolute legal immunity from defamation suits arising from what they write on U-5 termination forms.

The case was widely watched among industry lawyers, and is a major victory for brokerage firms, which have long complained about the threat of suits from registered representatives.

In a 4-to-2 decision, the state's highest court said that the “U-5's compulsory nature and its role in the NASD's quasi-judicial process, together with the protection of public interests, lead us to conclude that [U-5] statements ... should be subject to an absolute privilege.”

The court compared filing a U-5 to making a complaint about a lawyer to a grievance committee. New York courts have found that confidential complaints about lawyers are absolutely privileged.

But in a dissent, judge Eugene Pigott said “statements made on a Form U-5 are not intended to be part of any court proceeding” and that U-5 information is “widely disseminated.”

Because of the “serious potential damage to an employee's reputation and business prospects ... the [U-5] is amply protected by a qualified ... privilege,” Mr. Pigott said.

The case was Chaskie J. Rosenberg v. MetLife Inc.

Calls to Mr. Rosenberg's attorney, Maurice Heller, of Heller Horowitz & Feit, P.C. in New York, and Steve Obus, a partner at Proskauer Rose LLP in New York, who represented MetLife, were not immediately returned.


This is total BS...Firms can say whatever they want and we have no recourse.

Mar 30, 2007 8:15 pm


Maybe, it's just because my meds haven't kicked-in yet, but: Ok, I understand that the B/D's can't be sued for defamation, but they can be sued to remove inaccurate U-5 info, can't they? Or am I missing something?

Where's that prescription...

Apr 2, 2007 12:36 pm